Lower Gasoline Prices Not Enough to Boost Memorial Day Weekend Travel

Lower gasoline prices will not be enough for Americans to take a road trip this summer. They are still very concerned about the economy and their jobs.

Tourism experts as well as economists are anticipating only a slight rise in the number of summer travelers this year compared to previous years. Gasoline prices have dropped, but they are still high enough for Americans to stay off the road. There is an improvement in the job market, but it is still unstable. Moreover, household debt remains high.

Those who travel will not be free to spend their money without limits. According to experts, the majority of those who will take road trips will ensure that the trip is shorter. Moreover, they will also decrease their spending on entertainment and food to save cash.

It is widely believed that the cause for these declining trends in gasoline prices stem from falling crude oil prices, which make up about 66-75% of the price of retail gasoline.

34.8 million Americans will go on trips that will be less than 50 miles during the Memorial Day weekend, said the AAA. That is 500,000 more compared to the same weekend last year but the same as the number of travelers in 2010. Moreover, the AAA says that around 30.7 million, or 88% of all travelers, will drive. That is an increase of 1.2% compared to the travelers from the previous year. Overall, Memorial Day is a good summer travel indicator.

Low income Americans may decide to stay home due to gasoline prices. However, most Americans will prepare for gas if they can afford to take that trip to begin with.

George Washington University’s Department of Tourism Chair, Mr Douglas Frechtling, said that wider economic issues far outweigh gasoline prices for the majority of Americans when thinking of summer vacations. Weak job growth is most likely worrying several families and car payments, rent as well as other financial obligations are considered a higher priority compared to vacation.

The average gasoline price was about $3.85 a gallon when the AAA talked to 315 possible travelers between April 20 and 24. According to the survey, those earning under $50,000 annually will consist around 25% of all travelers on Memorial Day. That rate is lower by 33% compared to last year. Higher gasoline prices consume a huge share of the household budgets of low income families.

According to the AAA, the 66% rise in the average gasoline price from the month of January up to the early parts of April made a lot of people wary about driving on lengthy trips. The usual trip on this year’s Memorial Day will be 642 miles compared to 792 miles. 50% of the survey’s participants said that they will travel up to a maximum of 400 miles only.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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